In an investment context, a syndicate refers to a group of investors or financial institutions that come together to collectively finance a large project or investment, often one that would be too risky or capital-intensive for a single entity to undertake alone. Each member of the syndicate contributes funds and shares the risk and potential returns according to an agreed-upon structure.
Syndicates are commonly used in venture capital (VC), private equity, real estate investments, and large-scale business deals like mergers and acquisitions. In these settings, syndicates allow smaller investors to participate in high-potential opportunities by pooling resources with other investors.
Syndicates can be structured informally, such as angel investment groups pooling resources to fund startups, or formally, where an investment bank leads the syndicate and manages the process, as often seen in initial public offerings (IPOs) or large bond issuances.